Valentina Kristensen, Head of Communications at OakNorth, discusses the fintech unicorn’s journey to the cloud and how it worked with the regulator and AWS to become the first UK bank to be fully cloud-hosted.
In May 2016, we became the UK’s first bank to be fully hosted in the cloud – by this, I don’t just mean ancillary services such as the CRM platform or email, I mean the whole of the bank’s IT infrastructure down to the core. The Financial Times described it as a ‘landmark move’ for the industry, and it helped pave the way for other banks and financial institutions such as Starling and Monzo, who are also both now fully cloud-hosted, to follow suit.
We wanted to be on the cloud for several reasons:
• Flexibility – we’re able to change settings as we go along and continuously evolve our proposition in line with changing customer needs.
• Scalability – we can access as much or as little resource as we need, and scale up or down as required in minutes.
• Security – providers such as Amazon Web Services (AWS), our cloud provider, have servers in multiple locations so in the event of one being compromised, there are several back-up options available. We recently ran a BCP test and were able to re-build our core platform in a new location within five hours. They’re also able to invest a lot more in infosec than we ever could.
• Focus – Using AWS enables us to invest our time, money and energy into the activities that are of greatest benefit to the business and our customers.
• Speed to market – as a cloud-hosted bank, we’re able to make changes to our systems in days, rather than the weeks it takes larger institutions.
• Cost – being on the cloud has dramatically reduced our expenditure on hardware, software and related manpower as it makes it much easier to instantly deploy the latest updates to our IT infrastructure. We managed to reach cash flow break even in just 11 months – an achievement that wouldn’t have been possible had it not been for our move to the cloud.
Our migration came after months of working with Amazon Web Services (AWS), our cloud provider, and the regulator to drive the development forward. So how did we do it? When we first obtained our banking licence in March 2015, we wanted to launch as a fully cloud-hosted bank, but because there was no regulatory policy in place for this, we were unable to. By the time we exited mobilisation and launched in September 2015, we picked up conversations with the regulator again and made sure we chose a core system that we knew could be easily migrated to the cloud (Mambu). Over the next six months, we worked with AWS and the Financial Conduct Authority (FCA) on policy items around data protection, access to data, security and business continuity.
From a technology perspective, the FCA paved the way for the UK’s banks, insurers and other financial services companies to take advantage of cloud computing when it published its proposed guidance on outsourcing to the cloud and other third-party IT services in November 2015. Two months after we moved to the cloud, it published its finalised guidance and we provided a real-life example of how an FCA regulated entity could operate in the cloud.